Punjab-Haryana High Court
Jugal Kishore Arora vs Ajit Balaji Joshi And Another on 17 August, 2010
Author: Hemant Gupta
Bench: Hemant Gupta
IN THE HIGH COURT OF PUNJAB AND HARYANA AT
CHANDIGARH
Date of Decision : 17.08.2010
COCP No.1802 of 2009
Jugal Kishore Arora ...Petitioner
Versus
Ajit Balaji Joshi and another ...Respondents
CORAM: HON'BLE MR. JUSTICE HEMANT GUPTA
Present : Mr. Puneet Jindal, Advocate, for the petitioner.
Mr. R.S.Kundu, Addl. AG, Haryana, for respondent No.1.
Mr. A.K.Chopra, Senior Advocate, with
Ms. Shilpa Malhotra, Advocate, for respondent No.2.
HEMANT GUPTA, J.
The present petition under Sections 10 & 12 of the Contempt of Courts Act, 1971 is to take proceedings against the respondents for the failure to comply with the orders and directions of this Court.
The present contempt petition has a chequered history. The petitioner filed a suit for specific performance on 17.7.2003 of an agreement to sell dated 12.01.2000 in respect of land measuring 59 Kanals 9 Marlas owned by Dwaraka Nath-defendant No.1 (present respondent No.2), Brij Mohan-defendant No.2, Sohan Singh-defendant No.3 & Manpreet Singh- defendant No.4. Manpreet Singh-defendant No.4 admitted the claim of the plaintiff on 05.08.2003, whereas Brij Mohan-defendant No.2 and Sohan Singh-defendant No.3 admitted the claim of the plaintiff on 23.01.2004. Subsequently, the sale deeds in respect of their share of land stand executed in favour of the plaintiff.
COCP No.1802 of 2009 2
Dwaraka Nath-defendant No.1 (hereinafter referred as 'the contemner') has earlier allegedly entered into another agreement dated 21.6.1996 with Manpreet Singh and Puneet Kaur to sell his 1/6th share. The suit for specific performance of such agreement to sell dated 21.06.1996 was filed by the prospective vendees on 05.06.1999. There was an ad interim restraint order against the contemner from alienating the suit property. The said interim order was vacated on 25.11.2002.
The petitioner's suit for specific performance filed on 17.7.2003 was decreed on 24.02.2006 by the learned trial Court. In a first appeal by the contemner, Puneet Kaur, in whose favour the contemner has entered into an agreement on 21.06.1996, was impleaded as the respondent. The first Appellate Court dismissed the appeal filed by contemner on 01.03.2008 except to the extent of 1/6th share, the decree in respect of which was granted in favour Puneet Kaur.
It may be mentioned herein that the suit for specific performance and for injunction filed by Manpreet Singh and Puneet Kaur was dismissed by the learned trial Court on 24.06.2006, but granted a decree for recovery of the earnest money. Such decree was set aside in appeal vide judgment dated 30.10.2006. Puneet Kaur was granted decree for specific performance of agreement to sell dated 21.06.1996 in respect of 1/6th share of contemner. It was also held that Manpreet Singh has acknowledged the right of the contemner to sell land in agreement dated 12.1.2000, therefore, Manpreet Singh is estopped to seek specific performance of the agreement in his favour. The first appeal by the contemner stands dismissed. The second appeal filed by the contemner bearing RSA No.3240 of 2007 is pending before this Court in respect of such decree for specific performance. Even the appeals filed by the present petitioner challenging COCP No.1802 of 2009 3 the decree dated 01.03.2008 to the extent his suit for specific performance of 1/6th share of the contemner was dismissed, are pending before this court.
In the present contempt petition, the petitioner has referred to an order passed by the learned trial Court in his suit for specific performance on 04.02.2004 on the statement of the contemner that he shall raise construction on the suit property at his own risk and responsibility and if the suit is decreed, he shall remove the construction on his own. The said order reads as under :
"Defendants No.2 to 4 have admitted the case of the plaintiff and it is defendant No.1 who is hotly contesting the case now. Reply to the second injunction application u/o 39 Rules 1 & 2 CPC filed, on which defendant No.1 has given a statement reduced in writing that he shall raise construction on the suit property on his own risk and responsibility and if the suit is decreed, he shall remove the construction on his own or give the construction to the plaintiff without seeking any compensation. The ld. Counsel for the plaintiff has given a statement that he is satisfied with the statement given by defendant No.1 and now the second injunction application stands disposed of in terms of the statements given by the parties which shall remain binding upon them and the case now to come up for arguments on the first injunction application on 8.3.2004, when the evidence on behalf of the plaintiff shall also be recorded. Interim injunction on the first injunction application to continue till then."
After the judgment was pronounced by the first Appellate Court on 01.03.2008, the petitioner took out execution of the decree and on 23.04.2008, the possession of the land in dispute except the land falling to the share of Puneet Kaur was handed over to the petitioner on 05.05.2008 in pursuance of warrants of possession issued by the Civil Court. COCP No.1802 of 2009 4
The contemner's second appeals bearing RSA Nos.1371 & 1372 of 2008 came up for hearing before this Court on 09.05.2008, when the following order was passed :
"Mr. Chaudhary appearing on behalf of caveator submits that the copy of the Memorandum of Appeal has not been furnished to him. Mr. Jain has furnished complete copy of the paper book to Mr. Chaudhary in the open Court.
List on 15.7.2008 for consideration.
In the meantime, status quo shall be maintained by the parties as exists at 10.45 AM today.
9.5.2008 Sd/-
JUDGE "
Subsequently, on 29.05.2008 on an application filed by the contemner, this Court passed the following order in RSA No.1372 of 2008 :
"This is an application filed by the applicant/appellant, seeking delivery of possession of the suit property on the ground that the entire execution proceedings have been conducted in a hurried manner and that too without giving any notice to him.
Notice of the application was issued to counsel opposite and learned District Judge, Sonepat was directed to inquire into the matter and submit a report. The report has been received.
Learned counsel for the applicant/appellant states that the machinery and stocks of the Factory viz. Vardaan Food and Agro Tech Private Limited could not have been handed over to the non applicant/respondent in terms of impugned judgment and decree dated 01.03.2008 passed by learned Additional District Judge, Sonepat as it was only the agricultural land, which was the subject matter of the agreement to sell. The Executing Court could get the decree implement only with regard to agricultural land and not qua the building, machinery and stocks of the factory.
In the facts and circumstances of the case, the Deputy Commissioner, Sonepat, is appointed as Receiver henceforth COCP No.1802 of 2009 5 till further orders. He shall take charge of the factory viz. Vardaan Food and Agro Tech Private Limited and the articles lying therein and get an inventory prepared of all the machinery and stocks lying in the factory.
On the other hand, learned counsel for the non- applicant/respondent seeks a short adjournment so as to file reply to the application.
Adjourned to 15.07.2008.
Meanwhile, record of the execution proceedings be also requisitioned.
A copy of this order under the signatures of the Court Secretary of the Bench be supplied to learned counsel for the parties.
May 29, 2008 (NIRMAL YADAV)
JUDGE"
The order passed on the same date i.e. May 29, 2008 in RSA No.1371 of 2008 reads as under :
"Learned counsel for the appellant states that the machinery and stocks of the Factory viz. Vardaan Food and Agro Tech Private Limited could not have been handed over to the respondent in terms of impugned judgment and decree dated 01.03.2008 passed by learned Additional District Judge, Sonepat as it was only the agricultural land, which was the subject matter of the agreement to sell. The Executing Court could get the decree implemented only with regard to agricultural land and not qua the building, machinery and stocks of the factory.
In the facts and circumstances of the case, the Deputy Commissioner, Sonepat, is appointed as Receiver henceforth till further orders. He shall take charge of the factory viz. Vardaan Food and Agro Tech Private Limited and the articles lying therein and get an inventory prepared of all the machinery and stocks lying in the factory.
On the other hand, learned counsel for the respondent seeks a short adjournment so as to file reply to the application.COCP No.1802 of 2009 6
Adjourned to 15.07.2008.
Meanwhile, record of the execution proceedings be also requisitioned.
A copy of this order under the signatures of the Court Secretary of the Bench be supplied to learned counsel for the parties.
May 29, 2008 (NIRMAL YADAV)
JUDGE"
Subsequently, on 09.07.2008, this Court passed the following order :
"C.M.No.5928-C of 2008 Application is allowed and Annexures A-8 to A-12 are taken on record subject to all just exceptions. C.M.No.5929-C of 2008 This is an application for directing the Deputy Commissioner, Sonepat, who has been appointed as Receiver, to deliver possession of the factory building including plant, machinery and articles mentioned in Annexure A-8.
Learned counsel for the applicant argued that judgment and decree dated 01.03.2008 was passed with regard to land measuring 20 kanals, 7 kanals 18 marlas, situated in two villages namely Kishore and Joshi Chauhan, respectively, owned by judgment debtor. It is argued that the applicant had constructed building over the said land and was running a factory under the name and style of M/s Vardaan Agro Tech Pvt. Limited with plant and machinery worth more than Rs.25 crores. The production process involves use of hot-cell Hosing Cobalt-60, which is a nuclear product and produces radiation, which is hazardous for human beings if the same is not handled by an expert.
Learned counsel further argued that the decree holder in connivance with the Revenue Authorities, has dismantled the entire plant and machinery, which is lying on the road. It is further submitted that for installation of the said unit, the COCP No.1802 of 2009 7 applicant had taken a huge loan from the Banks and financial institutions.
Learned counsel for the applicant submits that now the entire premises is in possession of the Receiver appointed by this Court. However, the articles are not taken care of properly and most of the articles are lying on the road. It is further submitted that Cobalt-60 housed in the factory premises would decay during this period and transmit radiation. Therefore, it is prayed that the possession of the factory building including plant, machinery and cobalt-60 be handed over to him and he should be allowed to run the factory as an Agent of the Deputy Commissioner, Sonepat, who has been appointed as Receiver by this Court so as to avoid any untoward incident and further losses to the Company.
Notice of the application to counsel opposite for 15.07.2008.
Taking into consideration that the applicant would suffer an irreparable loss, if he is not allowed to run the factory, the Deputy Commissioner, Sonepat, who has been appointed as Receiver, is directed to hand over the articles as mentioned in Annexure A-8 and possession of the factory building where the applicant was running his business. The applicant shall take possession of the factory building including articles lying therein as an Agent of the Receiver subject to final order passed by this Court in this case.
A copy of the order be supplied to counsel for the applicant under the signatures of Court Secretary of the Bench.
July 09, 2008 (NIRMAL YADAV)
JUDGE"
However, it was on 29.05.2009, the appeals filed by the contemner were dismissed. This Court noticed the fact that the contemner has executed a lease deed dated 9.07.2001 registered on 13.07.2001 in favour of M/s Vardaan Food and Agro Tech Private Limited (hereinafter referred to as 'the Company') for a period of 99 years and the contemner COCP No.1802 of 2009 8 himself is the Managing Director/Chairman of the said concern. It also noticed that said Company availed term loan of Rs.350 lacs from the Bank of India and also term loan of Rs.495 lac from Technology Development Board, Ministry of Food Processing Industries, Government of India. The applications filed by the Bank of India and Technology Development Board (hereinafter referred to as "TDB") to become parties in the appeal were dismissed as well as the application of Dinesh Sharma and Mrs. Bina Sharma, son and daughter-in-law respectively of the contemner to become party in the appeal. While dismissing the appeal, this Court has passed the following directions:
"Before parting, it is mentioned here that the sale-deed has already been executed in favour of the plaintiff, but pursuant to directions issued by this Court, the possession is with the appellant being an Agent of the Receiver appointed by this Court. Therefore, with the dismissal of the aforesaid regular second appeals, the appellant and the Receiver are directed to hand over the possession of the land in dispute to respondent No.1 within a period of three weeks. The construction raised by the appellant over the suit land, as per his own commitment, was at his own risk and costs. However, he shall remove the same within the said period, failing which the plaintiff shall be at liberty to possess the suit property alongwith the construction raised thereupon without any payment in lieu thereof."
While dismissing the Special Leave Petition by the contemner and the Company on 15.06.2009, the Hon'ble Supreme Court granted time to the contemner till the end of August, 2009 to remove the machinery, if any, on filing of appropriate affidavits. The said order reads as under :
"The Special Leave Petitions as well as the application for permission to file SLP are dismissed.
Time is granted till the end of August, 2009 enabling the petitioners to remove the machinery, if any, still remaining, COCP No.1802 of 2009 9 subject to the petitioners filing appropriate affidavits within two weeks from today."
In pursuance of the extension and time granted, the contemner filed an undertaking by way of an affidavit, copy of which has been attached as Annexure P-7. The relevant averments made in the undertaking are extracted below :
"3. That this Hon'ble Court has dismissed the aforesaid Special Leave Petition filed by the petitioner/deponent vide Order dated 15.6.2009 and granted time till the end of August of 2009 enabling the petitioner to remove the machinery, if any, still remaining in property in dispute. This Hon'ble Court has granted two weeks time to the petitioner from the passing of the aforesaid order i.e. 15.6.2009 to file appropriate affidavits before this Hon'ble Court.
4. That the petitioner/deponent hereby undertakes to remove the machinery, if any, still remaining in the property in dispute before the end of August, 2009 in terms of the order dated 15.6.2009 passed by this Hon'ble Court without prejudice to the legal rights available in accordance with law.
5. That the petitioner/deponent further undertakes that the petitioner/deponent will not hand over the possession to any other person except the respondent No.1."
The Bank of India and TDB filed separate Special Leave to Appeals, which came up for hearing before the Hon'ble Supreme Court on 31.08.2009. Such appeals were disposed of with the following order :
"Permission to file SLPs granted.
The petitioner Bank sought impleadment as a subsequent mortgagee in a second appeal against a decree for specific performance. The application was rejected and the second appeal was also dismissed. Aggrieved by its non-impleadment, the Bank has filed this SLP.
The petitioner admittedly has initiated proceedings before the Debt Recovery Tribunal and has also initiated action against the Securitization Act. It is open to the Bank to take all COCP No.1802 of 2009 10 steps to recover the amounts said to be due to it, by pursuing the same in accordance with law.
As the Bank seeks relief against the property which is the subject matter of the decree for specific performance of an agreement of sale which is prior to the lease in favour of the borrower and the mortgage in favour of the Bank, it is open to the Bank to implead the purchaser and establish its right, if it has any right.
The non-impleadment in the second appeal will not come in its way.
Therefore, we find no reason to interfere with the impugned order of the High Court by which the application of the Bank for impleadment has been rejected and appeal has been dismissed. The special petitions are therefore rejected.
SLP(C) ..... CC.No.12900-12903/2009 Permission to file SLPs refused."
In terms of the order passed by this Court during the pendency of appeal, possession was taken over by the learned Deputy Commissioner, Sonepat as a Receiver. Therefore, the petitioner moved applications to the Deputy Commissioner, Sonepat for restitution of the possession on 01.06.2009 and 19.06.2009 (Annexures P-5 and P-8 respectively). The said request was reiterated on 1.9.2009 (Annexure P-10).
Son and daughter-in-law of the contemner filed a petition under Sections 397 & 398 of the Companies Act, 1956 before the Company Law Board, alleging acts of "oppression" and "mismanagement" against others including the contemner. The said petition was allowed by the Company Law Board on 29.08.2006 with certain directions. Company Appeal No.SB-46 of 2006 at the instance of the Company of which the contemner is Managing Director/Chairman is pending consideration before the Delhi High Court. In the said appeal, the following order was passed on 18.04.2009 :
COCP No.1802 of 2009 11"Co.A(SB) No.46/2006
1. It is stated that Mr. Krishan Kumar, learned counsel who is to argue the matter, is out of station.
2. A grievance is made by Mr. Dinesh Sharma that some machinery was not found in the factory premises.
3. Mr. Dwaraka Nath, who is present in Court, submits that no machinery of the company has been sold though some people came to see the machinery.
4. In view of the statement made by Mr. Dwaraka Nath, it shall be ensured that the status quo with regard to title, possession and construction of the properties of the company, both moveable and immoveable, shall be maintained.
Mr. Dwaraka Nath Sharma shall also ensure that the machinery belonging to the company, if removed, is restored to its position.
List for arguments on 6th May, 2009."
Ms. Shilpa Malhotra, learned counsel for the contemner has pointed out that the appeal is stated to be still pending for final disposal. TDB, who has provided financial assistance to the Company in whose favour the contemner has granted lease, filed a petition for grant of ad interim injunction under Section 9 of the Arbitration and Conciliation Act, 1996 before Delhi High Court. In the said application, Delhi High Court passed an order directing the parties to maintain status quo in respect of properties of the Company on August 28, 2009. The said petition has been disposed of as infructuous on 17.5.2010, when the following order was passed :
"In view of the execution petition having been filed and in view of the order having been passed therein today, present petition has become infructuous and is accordingly disposed of. The interim order made in the present petition stands vacated."COCP No.1802 of 2009 12
It may be noticed that pending such proceedings before Delhi High Court, in terms of the agreement between TDB, an Arbitrator has announced his Award on 13.11.2009 subsequently modified on 04.02.2010. Since the petition was for ad interim relief and in the meantime the Arbitrator has announced his Award, the miscellaneous application filed by TDB was disposed of as infructuous and thereafter, the TDB filed execution petition for execution of the Award. In Execution Application No.104/2010 and E.A. (OS) No.249 of 2010, the Court has passed the following order on 17.5.2010:
"E.A.(OS) 249/2010 Issue notice. Mr. Jayant K. Sud, Advocate, accepts notice on behalf of decree holder. Mr. Jagjit Singh, Advocate, accepts notice on behalf of judgment debtor No.1 and Mr. Sanjay Relan, Advocate, accepts notice on behalf of Mr. Jugal Kishore Arora, judgment debtor No.2, who has been impleaded to the present proceedings.
Let replies be filed within a period of four weeks from today. Rejoinder, if any, be filed before the next date of hearing. In the meantime, land situated in village Kishora and village Joshi Chauhan and Kishora, Tehsil and District Sonepat, Haryana measuring approximately 67 kanals and 04 marlas in village Kishora and 11 kanals and 17 marlas in Village Joshi Chauhan, situated at 43.2 KM stone, GT Karnal Road, Village Kishora and Joshi Chauhan, District Sonepat, Haryana (cortiguous land of two villagers) are attached and D.C. Sonepat, is appointed as a Receiver of the aforesaid property subject to any other order of any other competent court, the D.C. Sonepat shall take possession of the aforesaid land immediately and he shall be in exclusive possession of the said property. I further direct that Mr. Dwaraka Nath, shall be personally present in Court on the next date of hearing as this Court plans to record his statement under Order 10 CPC. Mr. Jagjit Singh, COCP No.1802 of 2009 13 learned counsel to ensure that Mr. Dwaraka Nath is personally present in Court on the next date of hearing. List on 18th October, 2010."
It may be mentioned that counsel for the petitioner has produced a certified copy of a document titled 'Cancellation of Lease Deed' dated 02.09.2003 executed by contemner in respect of lease in favour of the Company. But since no reference has been made by the petitioner in the petition before this Court, the said certified copy of the Cancellation of Lease Deed is not taken into consideration.
Learned counsel for the petitioner has vehemently argued that the contemner has granted lease of land in favour of the Company after entering into an agreement to sell with the petitioner. Once the decree for specific performance has been granted in favour of the petitioner and stands confirmed with the dismissal of Special Leave Petition at the instance of the contemner and the Company, the Company or the contemner do not have any right, title or interest in the land, the ownership of which vests with the petitioner. The only liberty granted to the contemner was to remove plant and machinery within extended time by the Supreme Court. The act of executing lease, after the agreement to sell has been proved to be executed in favour of the petitioner and decree granted and sale deed executed, the Company cannot claim any title over the suit property. In addition thereto, reliance is placed upon an undertaking given by the contemner before the Civil Court on 04.02.2004 as well as before the Hon'ble Supreme Court in terms of the order dated 15.01.2009. It is also pointed out that the interim orders passed by this Court on 29.05.2008 and 09.07.2008 were granted in favour of the contemner in respect of machinery and stocks of the Company and it is the contemner, who has been handed over possession of the factory as an Agent of the Deputy Commissioner, Sonepat. Therefore, once the COCP No.1802 of 2009 14 interim orders stands merged with the final orders of this Court and this Court has directed the contemner to return possession, the non-compliance of the directions of this Court to return possession is a intentional and flagrant abuse of the orders of this Court. It is willful disobedience of the orders passed. It is further contended that not only contemner has violated the directions of this Court, but has not complied with even the undertaking given by him in an affidavit in pursuance of the order passed by the Hon'ble Supreme Court.
It is further contended that the orders passed by the Delhi High Court in other proceedings i.e. arising out of petition under Sections 397 & 398 of the Companies Act, 1956 filed by the son and daughter-in-law of the contemner or the order in proceedings for recovery of the amount at the instance of TDB are relied upon as an excuse to avoid the directions and the orders passed by this Court. It is contended that the contemner was aware of the proceedings before the Company Law Board and the fact that he has taken loan or that the company of which he is the Managing Director/Chairman has also taken financial assistance, but gave undertakings time and again. Even otherwise, the order dated 17.5.2010 passed by the Delhi High Court directing the parties to maintain status quo is subject to the orders passed by any other Court of competent jurisdiction. Therefore, the decree for specific performance and the directions of this Court cannot be ignored either by the Deputy Commissioner, who was appointed as Receiver in pursuance of the order of this Court or by the contemner, who has taken possession as an Agent of the Deputy Commissioner.
On the other hand, Mr. Kundu, learned Additional Advocate General, Haryana appearing for the Deputy Commissioner-respondent No.1 COCP No.1802 of 2009 15 submitted that on account of an interim order passed by the Delhi High Court, he cannot comply with the orders passed by this Court, therefore, he cannot be said to be in contempt.
Mr. Chopra, learned Senior Advocate appearing on behalf of the contemner has argued that the Company is a separate juristic entity, who has been granted lease by the contemner and has raised huge factory building and installed machinery after availing financial assistance from the institutions. It is, thus, contended that undertaking of the contemner cannot be executed against the Company, who was not party to the decree for specific performance. Strong reliance was placed upon the orders passed by the Delhi High Court granting status quo, firstly in an appeal arising out of the proceedings under Sections 397 & 398 of the Companies Act, 1956 dated 18.04.2009 and the order dated 17.05.2010 in execution proceedings at the instance of the Secured Creditor granting financial assistance to the Company.
The order dated 18.04.2009 was passed on the statement of the contemner alone. It is his statement to maintain status quo with regard to title, possession and construction of the properties of the company, both moveable and immoveable. There is nothing on record that the contemner has disclosed the factum of the decree for specific performance granted by the Civil Court before such an order was passed. No doubt, subsequently the present petitioner has moved applications to become party in the proceedings, but the contemner has no hesitation in making any kind of statement in all proceedings so as to obtain benefit as per his convenience and wishes. The contemner has no love for truth and withhelds material information. It may be noticed that the contemner is a former Deputy Director of the CBI and knows the consequences of making a statement COCP No.1802 of 2009 16 before the Courts. It is the contemner, who has been handed over possession as an Agent of the Receiver i.e. the Deputy Commissioner, including factory of the Company. If the contemner can recover possession of the assets of the company, the contemner is duty bound to restitute the possession delivered to him in terms of the orders passed by this Court.
The subsequent order passed in Execution Application dated 17.05.2010, itself states that such order is subject to the order, which may be passed by any competent court. Therefore, the order of status quo passed in execution cannot be relied upon as a shield by the contemner to avoid the orders passed by this Court, more so, when he has taken possession as an Agent of the Receiver i.e. Deputy Commissioner, Sonepat.
Thus, respondent No.2 is guilty of willful and intentional disobedience to the orders passed by this Court. However, respondent No.2 is granted a weeks' time to purge the contempt.
In the meantime, learned Deputy Commissioner, Sonepat, who was appointed as a Receiver by this Court, is directed to deliver the possession to the petitioner.
17.08.2010 (HEMANT GUPTA) Vimal JUDGE